Build a complete picture of your business operating costs across all categories — staff, premises, marketing, technology and more. See the total, each category as a % of revenue and where the biggest opportunities are.
| Category | Monthly | Annual | % of Revenue | % of Costs |
|---|
Operating costs are the recurring expenses that keep a business running regardless of revenue. Understanding exactly where money goes — broken down by category, as a percentage of revenue and as a share of total costs — is the foundation of financial management. Most businesses that struggle with profitability do not have a revenue problem: they have an unexamined cost structure.
| Cost Category | Typical % of Revenue (SME) | Red Flag Above | Benchmark Notes |
|---|---|---|---|
| Staff & Labour | 25–45% | 60% | Highest cost for most businesses |
| Premises & Rent | 3–10% | 15% | Higher for retail, lower for remote-first |
| Marketing & Ads | 5–15% | 25% | Higher for early-stage growth businesses |
| Technology & Software | 2–8% | 15% | Higher for SaaS/tech businesses |
| Professional Fees | 1–5% | 8% | Accountants, lawyers, consultants |
| Total Overheads | 50–75% | 85% | Leaves 15–50% gross margin |
Operating costs (also called OPEX or overheads) are the recurring expenses needed to run the business: staff salaries, rent, utilities, software subscriptions, marketing, insurance and professional fees. They are distinct from Cost of Goods Sold (COGS), which are direct costs that vary with each sale. Operating costs typically remain roughly fixed regardless of revenue level.
Key approaches: (1) Remote/hybrid working — reduces premises costs by 30-80%. (2) Annual software billing vs monthly — typically saves 15-20% on subscriptions. (3) Review all SaaS subscriptions annually — average business pays for tools nobody uses. (4) Renegotiate supplier contracts annually. (5) Outsource non-core functions vs hiring full-time. (6) Share resources with complementary businesses.
Total operating costs (excluding COGS) as a percentage of revenue: below 40% is excellent, 40-60% is good, 60-75% is acceptable if gross margin is high, above 75% is concerning for most businesses. The operating cost ratio varies by industry — service businesses with high gross margins can sustain higher OPEX ratios than product businesses with thin margins.